The Real Test
You must leave home.
Your friends or neighbors
may rave about your product and think it will succeed. Or they may
believe it is a crazy idea which will never sell. It doesn't matter.
A more valid indicator of future success is whether or not your target
market likes the product and is willing to buy the product at a price
which returns profit to you.
If you have a specialty
product targeted for urban dwellers on the west coast between the
ages of 30 and 50 with above average income, then those are the people
with whom you will have to test your product. If the distribution
channel for products like yours is primarily gift shops which specialize
in "country" designs, then test your product with gift shop owners
and buyers.
Buying shows and food shows,
where purchasers see what is available for their store shelves are
excellent places to gather test information on your product. The North
Dakota Ag Products Utilization Commission provides assistance in getting
value-added food products to food shows and into food distribution
chains.
Put your idea on the line.
Test it and promote it with those whom you hope to make your customers.
The investment you make at this stage will be one of the most important
investments in the life of your business.
Got a winner? Plan again.
If your test marketing
goes well and seem to point to sure success with your product, then
plan again. Rework your initial plans and goals to make sure they
are in line with what you discovered during the testing phase.
Perhaps you need to cut
some production costs to make your product profitable. Perhaps you
need to rework your product to meet customers' needs and wants more
exactly. Perhaps the way your product is packaged does not explain
its unique features. Rethink your production process for corners to
cut. Rework your product to be closer to what customers want or need.
Redesign the package or label so your product can sell itself when
you are not with it.
Planning for market
success
The testing phase gives
you specific information about what customers want from your product.
It should also tell you what they are willing to pay for it and how
often they might purchase it. This information will help you to project
potential sales and develop a production schedule.
As you rework your plan,
make sure you address these issues:
Packaging
Packaging is important, particularly for specialty products.
If the primary market for your product is another business or industry
where they may package it under their label, packaging may not be
as important.
-
What message does
your package give to customers?
-
If your product is
on a store shelf, how does the package attract the attention
of potential customers?
-
What size and quantity
are your customers most likely to buy?
Sales and distribution
You can have a wonderful product. You can have customers willing
to pay for it. If you do not have a means of getting it in front
of customers when they are likely to buy it, or of delivering it
to customers in a way convenient for them, you will not profit from
your idea. Map out a sales and distribution plan based on information
about similar products and other information you obtained during
the testing phase.
Pricing strategies
North Dakotans are typically conservative price shoppers. What
may sell at home for $10 might sell for $20 or $30 in large urban
areas. Your pricing strategies should incorporate what you have
learned in testing your product with a knowledge of what it will
cost you to produce, market, sell, and distribute your product.
Setting a price for your product is a balance between what the market
will bear and what you need to ensure a profit.
Positioning
Specialty products developed for a niche market must motivate
customers to buy and keep buying. Quality and unique features, not
price, are usually the determining factors for niche customers.
Mass producers of similar products may use price as the motivating
factor for customers to buy their products they make a profit by
selling large quantities. However, small specialty producers need
to charge more in order to make a profit. That makes positioning
critical to niche marketing. Your position in the market place is
an expression of the quality and special features which tell your
customer that your product is worth a higher price.
Promotion
Once you have determine how to package, price and position your
product, and you know where you customers are most likely to buy
it, then you are ready to develop a way to promote your product.
Promotion includes advertising.
But it's more. How and where are you most likely to get the attention
of potential customers? Is it best if they read about your product?
Experience it? See it? Hear about it? A combination of ways?
Determining the best way
to promote your product is crucial to the success of the business.
Many entrepreneurs make costly mistakes by purchasing advertising
that never reaches their potential customers. Try to think like your
customers when you develop your promotional plan. What information
will they need to decide to buy your product? Remember value-added
products are usually purchased by customers because of their unique
qualities, not their price.
Whatever promotional strategies
you use, always evaluate the results. If they do not generate sales,
try something else.
Your marketing plan should
be supported by a business plan which addresses the operation, management,
and financial objectives of the business. For more information and
a guide for developing a business plan and marketing plan, refer to
the Here's the Plan and Testing
Your Idea Let's Talk Business seminars and chapters
Next
Chapter...
